Bruno's hope rides on legal tides

As ex-lawmaker awaits filing of appeal, federal law used to convict him faces challenges

By BRENDAN J. LYONS Senior writer

Published 12:00 am, Tuesday, September 7, 2010

Photo: CINDY SCHULTZ

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Former Senator Joseph L. Bruno salutes the crowd before throwing the first pitch of the Valley Cats home opening baseball game against Connecticut on June 18 at Joe Bruno Stadium in Troy. Bruno's two-year prison sentence for a fraud conviction is on hold pending appeal. (Cindy Schultz / Times Union) less

Former Senator Joseph L. Bruno salutes the crowd before throwing the first pitch of the Valley Cats home opening baseball game against Connecticut on June 18 at Joe Bruno Stadium in Troy. Bruno's two-year ... more

Photo: CINDY SCHULTZ

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Former state Senate Majority Leader Joseph L. Bruno talks to the press outside the federal courthouse after his sentencing in Albany on May 6, 2010. (Lori Van Buren / Times Union)

Former state Senate Majority Leader Joseph L. Bruno talks to the press outside the federal courthouse after his sentencing in Albany on May 6, 2010. (Lori Van Buren / Times Union)

Photo: LORI VAN BUREN

Bruno's hope rides on legal tides

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ALBANY -- Former state Senate Majority Leader Joseph L. Bruno, whose two-year prison sentence was put on hold pending the outcome of his appeal, may not see a resolution to his case until at least the middle of next year.

Bruno's appeal brief has yet to be filed due to a delay in obtaining a transcript of his lengthy criminal trial. The transcript must be submitted as part of the brief filed by his lawyers, who have up to four months to submit their arguments once it's received.

As Bruno waits, the legal landscape surrounding the federal honest services statute that was used to convict him last December has been shifting in similar cases following a June 24 ruling by the U.S. Supreme Court.

The Supreme Court, in a unanimous decision, retooled a statute that since 1988 had become the Justice Department's preferred weapon in white-collar and public corruption cases. The panel, in one of its most anticipated decisions in a decade, ruled the statute was unconstitutionally vague. The court also said honest services prosecutions must include an allegation of a bribe or a kickback, and not simply an official's failure to disclose a conflict of interest.

Bruno's attorneys trumpeted the ruling and have privately sought to convince federal prosecutors in Albany to vacate the conviction of Bruno, 81, who as Senate majority leader for 14 years was one of the most powerful people in state government. The Brunswick Republican abruptly resigned his post two years ago and retired to the private sector after 32 years as a senator and at a time when the federal investigation of his private dealings was intensifying.

Thus far federal prosecutors, who declined comment for this story, have given no indication publicly that they will abandon the conviction of Bruno. But in similar cases across the country, the decisions about how to handle the fallout of cases upended by the Supreme Court's ruling have involved wrenching debate between district offices, like Albany's, and top officials with the Department of Justice in Washington, D.C.

If Bruno's case goes forward on appeal, with his 24-month prison sentence and felony conviction hanging in the balance, the legal battle will be waged in the 2nd U.S. Circuit Court of Appeals in New York City.

In the three months that have followed the Supreme Court's ruling, federal judges in a smattering of similar cases have thrown out honest services convictions, although not in every instance. Meanwhile, federal prosecutors across the country have been compelled to determine whether to terminate ongoing honest services' prosecutions, or overturn convictions. Some of the decisions are being made in cases that involved allegations of egregious corporate fraud and public corruption.

Two weeks ago in Kansas City federal prosecutors announced they were abandoning their years-long investigation of two executives accused of looting Westar Energy, the largest electrical utility in Kansas. A federal judge subsequently dismissed the case.

"The law no longer supported our position," U.S. Attorney Barry Grissom said in a statement. "A great deal of consideration was given to this decision, both here and in Washington."

In late June, on the heels of the Supreme Court's ruling, a former North Carolina lottery commissioner, Kevin Geddings, was freed from a Georgia prison on a conviction that had similarities to Bruno's case.

Geddings was convicted on charges of enriching himself through undisclosed payments from a company later awarded, with his aid, a contract to run the state's lucrative lottery system. Like Bruno, Geddings took steps to hide his interest in the company at a time when it was vying for a state contract and in which Geddings would have a key decision-making role.

Geddings, who was serving four years in federal prison, received quick relief from the Supreme Court's ruling.

"As a result of this ruling, it is no longer a federal crime for state public officials to corrupt their public offices by engaging in undisclosed self-dealing," federal prosecutors in Raleigh, N.C., wrote in a June 29 memo to the federal judge who sentenced Geddings. "Consequently, the government concedes that Geddings is entitled to have his conviction vacated."

The judge in Geddings' case issued an order Aug. 27 that wiped out the conviction. He also instructed the government to return a $25,000 fine imposed on Geddings as part of his sentence.

Also last month, in New Jersey, U.S. District Court Judge Stanley R. Chesler threw out the conviction of a former Bergen County Democratic party chairman, Joseph Ferriero, who was prosecuted with a municipal attorney for concealing their financial interest in a company that sought public contracts and had benefitted from the attorney's official actions.

However, in Ferriero's case federal prosecutors did not concede defeat as a result of the Supreme Court ruling. They argued the conviction should stand, in part, because there was a precedent to uphold convictions even in cases where certain evidence was later found to be inadmissible.

"There is no precedent for granting a judgment of acquittal based on a failure to anticipate a subsequent change in the law requiring an additional measure of proof," wrote Rachael A. Honig, an assistant U.S. Attorney.

But the federal judge in Newark disagreed. In his order dismissing the case the judge noted the Supreme Court made clear that "a viable mail fraud indictment charging a scheme to defraud of honest services (requires) allegations of bribery or kickbacks, and could not be based upon mere non-disclosure of a conflict."

It remains unclear whether federal prosecutors will contest Bruno's appeal, although they have given no indication publicly that they won't.

William Dreyer, Bruno's co-counsel in the criminal case, declined to comment.

A person close to the case, and who is not authorized to discuss the negotiations publicly, said the federal prosecutors, in consultation with Justice Department officials in Washington, are discussing how to proceed.

Bruno was charged with eight counts of theft of honest services, and convicted on two. He was acquitted of five of the charges, although the appellate court may not decide that the dismissed charges are a factor. In fact, the court can weigh whether the jury reached its guilty verdicts on two of the charges because of the overall evidence presented by prosecutors through the nearly seven-week trial.

The definition of "kickback" in a federal law cited by the Supreme Court in its ruling resembles some of the facts that convinced jurors to convict Bruno after his trial. Prosecutors also had accused the former senator of not only failing to disclose conflicts of interest, but of violating the state's ban on gifts worth more than $75.

Gifts, as federal law defines it, are a form of kickback.

Still, there was no direct allegation in the indictment, or the instructions given to the jury, that Bruno received a bribe or kickback. His attorneys have said his conviction should be vacated because the indictment and verdict did not meet the standard set by the Supreme Court.

The theory of the government's case was that Bruno, with the oversight of Senate lawyers, enriched himself through private consulting deals worth more than $1.3 million and involving companies and individuals who had a heavy interest in his legislative powers. The trial also showed that Bruno used Senate workers to run his private company and to do his personal bidding, including shopping, banking and errands.

The three possible outcomes if the case is decided by the Second Circuit Court of Appeals are that Bruno's conviction could be overturned, affirmed, or dismissed with leave for prosecutors to start over, with a new grand jury, if they choose.

Brendan J. Lyons can be reached at 454-5547 or by e-mail at blyons@timesunion.com.